Prime Minister David Cameron met Stormont First Minister Peter Robinson and Deputy First Minister Martin McGuinness at Downing Street last month to discuss steps including the devolution of powers to reduce corporation tax levels paid by businesses which could encourage foreign investment.

Ms Villiers told MPs: "We are working with the Executive on a substantial new economic package, alongside measures to build a more cohesive and stable society.

"The package is in addition to the support Northern Ireland already receives from the UK Government."

She said Stormont's Executive should develop economic and social measures including work on a shared future.

"Put simply, it is a two-way street - the greater the Executive's ambition the more the UK Government will be able to do to help," she added.

"This is about partnership and working together and I am optimistic about the chances of achieving a good outcome for Northern Ireland."

Mr Robinson said ministers in Northern Ireland were pressing the Prime Minister to agree to devolve corporation tax, which would allow the executive the power to reduce it in line with the Republic of Ireland's 12.5% and more effectively compete for foreign investment.

"We have a job which was identified by the Prime Minister of attempting to grow our private sector in Northern Ireland, to rebalance our economy," he said.

"We cannot do that without having some additional fiscal levers available to us."

He called for Westminster to allow flexibility.

Mr McGuinness accused Mr Cameron of reneging on an agreement "ring-fenced" by Labour in cutting the peace dividend by 40%.

"It should not have happened, it was totally and absolutely wrong," he said.

"What David Cameron needs to understand is that when political leaders go as a group and we get guarantees described as ring-fenced we expect people to keep their word.

"This is a peace process we are talking about, this is about showing people in communities that they can benefit from the fruits of peace. This administration was truth-bound to stand by those commitments and they have not done that."